A first-time home buyer owes $5,000 to the Canada Revenue Agency after withdrawing her retirement savings for a condo down payment.

Her story provides an example of what not to do when taking advantage of a government-sponsored tax shelter program.

Susan (not her real name) realizes she didn’t take enough precautions when closing a real estate deal under tight deadlines in a hot market.

“I bought a one-bedroom condo in 2011 and cleaned out all my savings to do it, including my RRSPs,” she says.

Since the Toronto condo was close to a subway station, it attracted interest from several buyers. There was a bidding war.

Susan ended up paying $407,000, which was higher than the listing price and more than she had expected to pay. She scrambled to make a 20 per cent down payment to avoid paying a premium for mortgage default insurance.

In the two months before the deal closed, she took out $13,000 from her registered retirement savings plans at two banks.

She didn’t know anything was wrong until she received a $5,000 tax bill a few months ago on the withdrawals.

What happened? She was being penalized for not declaring that she was a first-time home buyer when she took out the money.

?“I stupidly did not tell the banks what the money was for. This meant they weren’t informed to be able to properly designate the RRSP withdrawals,” she says, blaming inexperience for the error.

This was her first mistake. She should have tried calling the Canada Revenue Agency and checking its website – which is easy to navigate – to find out exactly how the Home Buyers’ Plan (HBP) worked.

The HBP allows you to withdraw up to $25,000 from your RRSP in a calendar year to buy a qualifying home.

You must complete form T1036 for each eligible RRSP withdrawal.

After you fill in one area, you give the form to your RRSP issuer to fill in another area.

Your RRSP issuer will send you form T4RSP, showing the amount you withdrew under the HBP in box 27. You have to attach this slip to your income tax return.

Susan made another mistake. She assumed it was easy to fix the paperwork – which hadn’t been done properly – and backdate it more than two years.

“I spoke to two CRA representatives, both of whom confirmed that I could retroactively designate the RRSP withdrawals under the Home Buyers’ Plan. All I would need was for the banks to reissue my T4 slips,” she said.

But when she asked the banks to reissue her T4 slips, one seemed willing. The other said absolutely not.

Banks are allowed to make their own decisions on such matters.

“If the form is not completed as stipulated in advance of the withdrawal, the Minister of National Revenue does not have any legislative authority to retroactively reclassify a withdrawal from an RRSP as a withdrawal under the HBP,” said CRA spokesman Philippe Brideau.

CIBC, the bank that refused her request to reclassify the RRSP withdrawal, did not want to comment about Susan’s case in particular.

“There are forms to fill out,” said CIBC spokesman Kevin Dove. “If you don’t fill them out, you can ask to change something on a backward basis. But it’s more possible to do it when you take the mortgage out with us. Then, we have an audit trail.”

It would be hard to tell the CRA that a customer withdrew RRSP funds for a first home if CIBC had no record that the money was used for that purpose, he explained.

Susan had used a mortgage broker to arrange financing and had borrowed from a smaller financial institution. So, she couldn’t fall back on being a CIBC mortgage customer.

“This is my money,” she said in her email. “Is it fair that the government should be pocketing money that isn’t theirs?”

This was Susan’s third mistake – not realizing the government always has its hands in your RRSP. Since your contributions are deducted from income and not taxed, you will be taxed on withdrawals at a later date.

Free seminar: My financial basics workshop will be held Tuesday, May 13, at Ryerson University’s Chang School, 5.30 to 9.30 p.m., at 297 Victoria St., Toronto. It’s open to everyone who wants to brush up their money management skills.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca or www.ellenroseman.com for more information about mortgages in Barrie, Barrie Mortgages, information on the best mortgage rates from a mortgage broker visit www.darick.ca or call Darick Battaglia directly at 705 623 8658

I believe the statements below are true. You are highly advised to consult with a lawyer to either confirm or dispute the statements. This was written to help assist the problem that exists along the shoreline of Tiny Township regarding beach ownership and use and was not meant to create harm to anyone. I would appreciate your feedback or comments if you have anything that could help add to this blog to help clarify the issues.

The ownership trail is not complicated but along the way it has seemed to become misunderstood. The true ownership should be fully understood by realtors, and lawyers representing buyers and sellers so as to not misrepresent public and private shorelines and face potential lawsuits. 

The landscaping characteristics along the shoreline in Tiny Township is a mixture ofsandy beach, rocks, large boulders, and small stones. Georgian Bay is part of Lake Huron and the Great lake system. Tiny Township is bounded by 52 kms of shoreline along Georgian Bay.  It is the “beach” landscaping that has taken on a life of its own worthy of a Hollywood move. Very little attention is given to the rocky shoreline but it does possess the same underlying issues.

In the mid to late 1800s the Federal Government issued Crown patents to the early settlers dividing the Township into large tracts of land that were sold and originally farmed. Some of these parcels of land extended to the water’s edge of Georgian Bay and the rest were inland properties.

The Waters’ edge is an important term here. The patents that were granted were not to the high water mark or to any other description other than to the Water’s edge. This means that as the water levels increase, and most recently decrease significantly, the water’s edge is defined as to where the edge of the water is. In other words; the property lines is dynamic moving with the water levels.

By the early 1900s the settlers who purchased their crown patents of land, or those they may have sold or become business partners with, began to develop plans of subdivision by dividing up their property into smaller single family building lots for sale to those that wished to build new cottages.

Most of these original new plans of subdivision occurred along the shoreline creating waterfront properties and back lots along a main road that we have come to know as Tiny Beaches Road South and North.

For the most parts these lots were 50 to 100 ft wide.  The developers of these new subdivision were required to follow Township by-laws, Federal and Provincial  Ministry requirements.

There was confusion by Government Ministries at this time that has trickled down to present day and has found its way to the courtrooms in Ontario.  This confusion involved  an incorrect assumption by the Ministry of Forestry and Lands that the Great Lakes were on a Tidal system and as such prevented developers to create property lines beyond the “high water mark” , a term that applied to Bodies of water with Tides.

The Great Lakes do not have Tides.

The property developers disputed this claim but nonetheless they were told that if they wanted to create their subdivisions they had to adapt to this new interpretation of the definition of their property line.  They were not permitted to create a property boundary line beyond the high water mark.   As a result of this mistake, the lands between the surveyed mark of either a specific defined measurement or the  high water mark and the waters edge reverted back to the Crown again. Interesting note here: The Crown..not the Township. If the Township wanted to use the lands they were required to lease it back from the Crown.

A short time later this mistake was realized by all government authorities and the lands reverted back to the developers. 

Some of these developers , or the heirs over time,  kept the beach in front of their newly created boundaries for themselves, some donated them back to the Township creating public beaches, some of the developers created community beaches whereby only those in their plan of subdivisions could use the beach.  This is how it is. The waterfront ownership in Tiny has many different descriptions

Now’s a great time to get a mortgage thanks to historically low rates. As you can see from the historical data below, today’s average mortgage rates are lower than they were in the 50s! Although rate isn’t the only important aspect of a mortgage, it’s interesting to see how rates have fluctuated over the past few decades. In the most recent 15 years banks were offering discounts of 1% to 1.3% off the rates below. If you know of anyone that is thinking of buying or refinancing your referral would be very much appreciated. www.darick.ca dbattaglia@dominionlending.ca 705 797 8811

1958 6.80%

1959 6.98%

1960 7.18%

1961 7.00%

1962 6.97%

1963 6.97%

1964 6.97%

1965 7.02%

1966 7.66%

1967 8.07%

1968 9.06%

1969 9.84%

1970 10.45%

1971 9.43%

1972 9.21%

1973 9.59%

1974 11.24%

1975 11.43%

1976 11.78%

1977 10.36%

1978 10.59%

1979 11.98%

1980 14.32%

1981 18.15%

1982 17.89%

1983 13.29%

1984 13.61%

1985 12.18%

1986 11.22%

1987 11.14%

1988 11.60%

1989 12.05%

1990 13.24%

1991 11.16%

1992 9.52%

1993 8.70%

1994 9.34%

1995 9.22%

1996 7.94%

1997 7.07%

1998 6.90%

1999 7.39%

2000 8.20%

2001 7.18%

2002 6.70%

2003 6.04%

2004 5.80%

2005 5.48%

2006 5.98%

2007 6.36%

2008 6.41%

2009 5.05%

2010 4.82%

2011 4.57%

2012 4.24%

2013 4.17%

any experts believed that the real estate market was cooling. But as the spring buying season begins, it’s clear that’s not true. Housing

Housing prices: What does $400,000 buy you?

According to the Canadian Real Estate Association, the national average price for a home in March was $401,419, an increase of six per cent in year-over-year comparisons.

While the market defies predictions, one thing’s for sure: The continued rise of Canadian home prices is putting a damper on the hopes and dreams of first-time buyers.

Sarah Wiseberg, who rents a condo in Toronto’s pricey downtown core, knows this only too well.

“I’ve been searching for almost a year, and I think it’s extremely discouraging for a first-time homebuyer, particularly if they are looking for something other than a 500-square-foot condo,” Wiseberg said.

Agata Pietrzak, a real estate broker for Remax Condos Plus in Toronto, says there are many buyers entering the housing market, but not enough supply to meet that demand.

“In terms of single-family homes, there is a lack of inventory, and that usually results in a bidding war,” Pietrzak said. “It is almost unimaginable to buy a house at list price now.”

In some instances, Pietrzak says she has seen first-time homebuyers with small families resort to condos, because prices for houses were way beyond their budget. The risk of bidding wars

In a recent report released by BMO Financial, the national average budget for first-time buyers has increased to $316,000, with Vancouver topping the list at $506,500. Toronto comes in at $408,300 and Calgary at $363,400.

Wiseberg, who says she is willing to spend between $500,000 and $600,000 for her first home, entered the housing market after abandoning the idea of spending hundreds of thousands on a condo. She couldn’t believe the competition in the housing market.

‘Every house that I’ve gone to easily goes $100,000 over the asking price’- Sarah Wiseberg, first-time buyer looking to purchase in Toronto

“Every house that I’ve gone to easily goes $100,000 over the asking price,” Wiseberg said. “I definitely do not want to enter a bidding war, because I don’t want to be cash-poor.”

The BMO Financial report found that 60 per cent of first-time buyers in Canada are delaying purchases, and 39 per cent of those cite high prices as the main reason.

But not all is doom and gloom. Several cities across the country have seen price drops, including Montreal, Winnipeg and Regina.

Broker and manager Daniel Wachniak from Royal LePage Dynamic in Winnipeg says the city’s housing market is fairly balanced, but specifies other factors are at play when it comes to pricing. He said the prolonged winter is one factor that explains the recent price decrease in Winnipeg.

“You have to look at our weather and the time of year,” Wachniak said. “The houses that probably sold [in late winter] were more open to negotiations than houses being listed right now.”

When it comes to bidding wars, Wachniak said he has seen them go as high as $80,000 over asking price.

“We had different spikes, ranging from $5,000 to $80,000, where a house in a certain area not usually seeing listings results in a bigger demand,” he said. ‘Getting squeezed’

Given lenders recent decision to cut its five-year fixed mortgage rate to 2.99 per cent, Pietrzak said it’s a good time to buy, especially for first-timers.

“I’m working with several first-time buyers right now and they are becoming more confident in the market and with the rates available,” she said.

“Many first-time homebuyers in Toronto are getting squeezed,” Mangaroo said. “A lot of the mortgage rules that have happened in the last couple years have made it harder to get a mortgage.”

In 2012, the federal government reduced the maximum insured amortization period for a mortgage to 25 years. It has also tightened other regulations, like putting a limit on the percentage of their gross household income a homebuyer can spend on home expenses in order to qualify for a mortgage.

These factors, along with a short supply of houses, especially in urban centres, is having a negative effect on buyers, says Mangaroo.

The disparity is evident in the numbers: The average budget for first-time buyers in Toronto stands at $408,300, but the average house price in Toronto is $546,597.

Buyers unhappy with the condo lifestyle are finding their options increasingly limited.

Preferring a house with space and character, Sarah Wiseberg has her eyes set on a home in one of Toronto’s older neighbourhoods. She found a couple of houses with potential, but they sold before she could even make an offer.

While prices may grow further out of reach, Wiseberg said she is reluctant to turn to her parents for financial assistance. She’s determined to do it on her own.

“I think whatever is meant to be will be,” she said. “If I find a place by June, amazing. If I don’t, then I’m fine with renting for another year.”

Landlords and tenants need to co-operate when selling a home

There is lots of confusion as to the rights of landlords and tenants in Ontario when a home is put up for sale. Landlords are trying to bully tenants into leaving and tenants are refusing to permit potential buyers to see the home.

Here are the rules:

• Landlords can sell their home at any time;

• If the tenant has a lease, they cannot be evicted before the end of their lease term;

• Tenants must permit showings to potential buyers, as long as 24 hours’ advance written notice is given and the showing takes place between 8 am to 8 pm. Tenants need to make sure that any pets that they own are kept securely during showings. Tenants are permitted to be at the home during showings, although it is not mandatory.• If a tenant’s lease has ended, they automatically become a monthly tenant and must still be given 60 days’ notice to vacate, provided that a buyer has already unconditionally agreed to buy the home.

Some tenants believe that if they still have a lease for several months, the landlord cannot show the home to potential buyers. Wrong. If the buyers do purchase the home, they must still respect the terms of the lease when they take over as landlord. At the end of the lease term, the buyers, now the owner, can provide a 60 days’ eviction notice based on the fact that they need the home for themselves or their family.

If a tenant refuses to permit showings after proper notice has been given, the landlord can start eviction proceedings as this is a breach of conduct by the tenant. The landlord could also potentially claim damages from the tenant if the tenant’s actions prevent the landlord from selling the home in a timely manner.

Landlords cannot trick tenants into leaving either, pretending to move in so that the tenant vacates and then immediately fixing the place up and selling it. The tenant can sue the landlord for damages if this occurs. This can include all the tenant’s moving costs and higher rent that may have been paid elsewhere. The Board may also add additional fines for breaking the law.

If you are planning to sell your home, my advice is to approach your tenant first to work out a plan for showings that accommodates everyone, so that the tenant can properly plan to protect their valuables and secure any pets and the landlord can permit potential buyers to see the home on a timely basis. As an example, agree to only permit showings from 4-6 pm each day.

Some landlords assist their tenant first in finding another place to live, even before putting the home up for sale. This is also an excellent solution, in my opinion. The tenant gets to find another place, without the stress of an eviction proceeding, and the landlord then gets to later fix up their home and make it more presentable to a wider range of potential buyers.

When landlords and tenants understand the rules and co-operate when a home is being sold, everyone wins.

How to Put a Fraud Alert on Your Credit Report

You just discovered a charge on your card that you are certain you did not—nor ever would—authorize. You may well be—or about to be—the victim of fraud. If you suspect this is the case, you would be wise to place a fraud alert on your credit report. Placing a fraud alert means that your credit report file will be flagged so that before issuing new credit, creditors are required to contact you or otherwise verify your identity. There is never a fee on placing a fraud alert. We’ll show you how to do it.

Method 1 of 3: Online

Go to one of the three CRCs (Credit Reporting Companies). These are Experian, Equifax, or TransUnion. Each of them will let you put a free 90-day fraud alert on your account.

Place the alert with any one of the CRSs, and it will notify the other two to place an alert as well.

Determine what type of fraud alert you need:

Initial Fraud Alert. This is if you are concerned about the possibility of becoming a victim of fraud or identity theft. It generally is good for 90 days. This requires proof of identity and a copy of your identity theft report. This also entitles you to a free credit report from all three CRCs.

Extended Fraud Alert. This is what you file if you are a victim of fraud or identity theft. This will stay on your credit report for seven years.

You will need a copy of your identity theft report.

This entitles you to a two free credit reports from all three CRCs in the first 12 months, then one a year after that.

Active Duty Military Alert. This is if you are in the military and want to minimize your risk of fraud or identity theft while you are deployed. It will remain on your report for one year.

Place a fraud alert. Visit one of the CRCs, and locate the Fraud Alert link on the home page.

Fill out the form. You will need to fill in your name, address (and in some cases, previous address), Social Insurance information, and other information relevant to your particular alert type.

Click Submit when finished. Your notice will go onto your report, and the other CRCs will also be notified.

Method 2 of 3: Telephone

Call a CRC. Their automated phone systems will guide you to the correct customer service representative who can help you with your report. Be prepared to give them your personal information including addresses, social security number, and contact info. Here are the numbers:

TransUnion: 1-877-713-3393

Equifax: 1-800-465-7166

By notifying one of the bureaus that you are at risk of being a victim of identity theft they should automatically notify the other two.

The alert will remain in effect for 90 days, though you can call back after the 90 days and place another alert on your account.

Get an extended fraud alert. If you have evidence of actual or attempted identity theft and have filed a police report, you can extend the alert for 7 years.

This is what I did.

Sign up with a CRC. Each of the CRCs have their own form of credit monitoring products that offer varying services to protect you, financially.

TransUnion offers TransUnion Total, which covers everything from identity theft and credit monitoring to neighborhood watch.

Equifax offers Equifax Complete, a family of products for personal, family, and business credit protection.

Since home refinancing has been limited to a maximum 80% of the value of your home, an increasing number of buyers are looking at Purchase Plus Improvements products to meet their home financing needs.

This may be an option worth examining if you would like to buy a new home that needs updating. Whether you’re purchasing a home that needs just a small renovation or a major redo, a Purchase Plus Improvements mortgage can help you transform an ordinary house into your dream home. How Purchase Plus Improvements works

Purchase Plus Improvements programs enable you to obtain funding for the cost of the home purchase as well as the cost of the renovations – up to a maximum value of 95% of the total purchase price.

Conditions of the program include:

• As a borrower, you must provide a list of improvements with quotes at the time of application. As a result, more time may be required for Subject Removal

• The initial advance of funds at time of closing will be up to 95% of the approved value of the property minus the cost of improvements

• The balance of the funds will be held in trust by the solicitor until completion of the approved improvements (time limits may be imposed), which is confirmed via:

o An inspection report or

o Confirmation from a certified appraiser or

o An invoice from the contractor who completed the improvements

• Usual sub-search and Construction Lien Act requirements are to be adhered to at the time of release of holdback

• Some restrictions may apply depending on the lender

As always, if you have any questions about the information above or your mortgage in general, I’m here to help!

www.darick.ca dbattaglia@dominionlending.ca barrie best mortgage broker, best mortgage rates barrie, debt consolidation, home renovation, home financing barrie

Tips for Buying a Second Home or Vacation Property

Vacation Homes/Cottages/Second Homes

At Dominion Lending Centres Barrie, we know that today’s busy lifestyle requires more home ownership options – whether it’s a second home in the city to reduce that weekly commute, or a cottage at the lake for weekend getaways. With our Vacation/Second Home Program, Canadians can now purchase a second home or cottage with an affordable monthly payment with 5% down payment.

Acceptable loan purpose

* Second homes (Type A) available for purchase and refinance

* Vacation homes (Type B) available for purchase only

* Program does not provide for the purchase of investment, rental pool or timeshare properties; therefore, incidental rental income will not be used for qualification purposes.

* Type A properties: 95% LTV (Purchase) and 90% LTV (Refinance) * Type B properties: 90% LTV (Purchase)

Max Loan Amounts

* Type A – Maximum loan amount: Metro Toronto, Metro Vancouver and Metro Calgary – $700,000; rest of Canada – $600,000 * Type B – Maximum loan amount: $350,000 (exceptions will be considered on a case by case basis)

Type A Properties (Second Homes):

* Property characteristics must comply with the our Mortgage Owner Occupancy Program

* Up to two units Maximum

* Available for purchase and refinance

Type B Properties (Vacation Homes and Cottages):

* Property characteristics same as Type A properties except for the following;

* Property need not be winterized

* May have seasonal access (road not plowed during winter)

* One unit maximum

* Available for purchase only

Terms/qualifying interest rates

* Six months up to 25 years – Fixed, standard variable, capped variable and adjustable rate mortgages are permitted

* For terms less than three years, the qualifying interest rate is the greater of three-year posted rate or contract rate

* For terms of three years or more, we use the contract rate

Amortization Options:

Type A

LTV > 80%: Up to 25 years

LTV ≤ 80%: Up to 40 years

Type B

Up to 25 years

Feel free to contact us for more details. barrie mortgage broker, Best mortgage rates www.darick.ca dbattaglia@dominionlending.ca

Canadian home prices continued their surprisingly strong ascent in February, but are unlikely to prompt policy-makers to take actions to cool the market at this point.

The average selling price of existing homes that traded hands across the country last month was $406,372, up 10.1 per cent from a year earlier.

The MLS Home Price Index, which seeks to create a more apples-to-apples comparison of prices by accounting for changes in the location or types of homes that are selling, rose 5.1 per cent. That increase, which was driven by rising prices in Calgary and Toronto, outdid the 4.83-per-cent annual increase in January.

Prices maintained their upward trajectory even in the face of a soft winter sales market. Sales ticked up in February after five months in a row of declines. But they were up only 1.9 per cent from a year ago, or 0.3 per cent from January (the latter comparison being seasonally adjusted).

After seeing the latest data, the Canadian Real Estate Board, which represents Realtors and tracks the market by way of the Multiple Listing Service, cut its forecast for sales this year and raised its forecast for average prices.

“The only thing that has not happened yet is a slowing in Canadian home price growth – but that too will likely come,” Toronto-Dominion Bank economist Diana Petramala wrote in a research note.

She said that home price growth is being supported in many major markets by a lack of homes for sale, which is giving sellers more bargaining power. But listings should improve as the weather heats up and as potential sellers are drawn into the market by the higher prices.

The expectation that home price growth should cool this year is one of the reasons why policy makers – who are facing international scrutiny as pundits debate just how overheated Canada’s market is – are unlikely to act now.

In addition, Bank of Montreal economist Douglas Porter notes that while national price momentum has picked up, the “gains have not been widespread across markets – and that should provide some solace to policy makers.”

Finance Minister Jim Flaherty has taken numerous steps to slow the housing market in recent years, amid concerns that home prices and mortgage debt levels were rising too quickly.

Mr. Porter noted that the average national price is being skewed by a rebound in pricey Vancouver. “For a more realistic gauge of price gains, the median city was up about 3per cent year-over-year (i.e. half of the cities are seeing sub-3-per-cent price growth),” he wrote in a research note.

Bank of Montreal economist Robert Kavcic said that unless you’re in Calgary or have a detached home in Toronto, chances are your property hasn’t actually appreciated anywhere near as much as the 10.1-per-cent jump in the national average over the past year.

The Canadian Real Estate Association is now expecting the national average price to rise 3.8 per cent this year from 2013, to $397,000. It had previously forecast a 2.5-per-cent rise in average prices this year, to $391,000. (It says that the projected average for the year is below February’s average because the national average selling price tends to be higher in the early months of the year).

It now anticipates a 1.3-per-cent rise in sales this year, to 463,700 homes. In December, it was forecasting a 3.7-per-cent rise.

For years, most of Marg Green’s self-employed clients could count on getting a mortgage on the strength of their credit score, and on their word that they were earning enough from their business to repay the loan.

These days, because of rules brought in almost two years ago by the regulator of the country’s chartered banks, borrowing money to buy a home has become harder for many of the country’s 2.75 million self-employed workers – a group that, according to Statistics Canada, has a higher median net worth than paid employees. More Related to this Story

“We went through years and years when my clients who were self-employed could get a mortgage if their credit score was 680 or higher, with next to no documentation,” says Ms. Green, director and broker at Concierge Mortgage Group, based in Mississauga. “Today I’ve got clients going in to their bank for mortgage refinancing and they’re shocked because suddenly they’re no longer approvable.”

In the summer of 2012, the Office of the Superintendent of Financial Institutions introduced Guideline B-20, which required federally regulated banks to tighten their processes for approving mortgages and home equity lines of credit. As part of B-20, banks must now look more closely at incomes before approving a mortgage application.

This presents a problem for self-employed workers, who typically lower their taxable income by maximizing business expenses and personal deductions. Because of the discrepancy between what’s on their tax return and how much money they actually earn, self-employed workers have typically obtained their mortgage through “stated income” applications, which required a signed income declaration and proof of self-employment such as a business registration number or articles of incorporation.

Today, self-employed workers can still apply for a stated income mortgage at some banks, but under B-20 they can borrow only 65 per cent of the purchase value – 10 per cent less than what was allowed before B-20 – without requiring default insurance from Canada Mortgage Housing Corp., Genworth Canada or Canada Guaranty.

“If you have less than 35-per-cent down payment, your mortgage now has to be insured, and insurers have specific guidelines that you need to meet,” says Ms. Green. “For example, CMHC will allow a stated income application as long as you have been self-employed for less than three years. More than three years and you have to qualify according to your net taxable income.”

So what can self-employed workers do to improve their chances of qualifying for the mortgage they need, on terms that work for them?

Jeff Brown, vice-president for delivery initiatives and business integration at Toronto-based Credit Union, says coming in with complete and current financial and tax documents is critical. Meridian usually asks for the latest notice of assessment from Canada Revenue Agency and financial statements from the past two years.

“We may also ask to see bank statements to show regular income going into your bank account,” says Mr. Brown.

Raza Hasan, senior vice-president for retail lending and wealth-management risk management at Canadian Imperial Bank of Commerce, says self-employed borrowers need to make sure they are up-to-date with income and sales tax returns, and that they don’t owe taxes.

They also need to be ready to explain their business. “It’s very important that you be able to discuss the details of your business – your income, expenses, at what point in time you will break even, your business milestones,” Mr. Hasan says. “Then we can look at that and find the right solution for you.”

The more information a bank has, the better it can help self-employed borrowers qualify for the mortgage they want, says Ms. Green, whose client base is made up largely of self-employed workers.

“Certain lenders allow add backs of things like car expenses, capital cost allowance or housing expenses,” Ms. Green says. “These add backs then enable the applicant to qualify for what they want to buy.”

Some lenders take a different approach to increase the mortgage eligibility of self-employed workers. Vancity Credit Union in Vancouver, for one, adds 15 per cent to reported income and will boost the percentage if the self-employed borrower provides financial statements showing deducted business expenses totalled more than 15 per cent.

Ms. Green notes that some lenders affected by B-20 and many still extend a mortgage of up to 80 per cent of purchase value to stated-income applicants without the need for default insurance.

For sole proprietors or owners of an unincorporated business, making the leap to incorporation could also help, says Jeff Hull, senior financial adviser at Manulife Securities Inc.

“Most banks prefer salary, and if you have a corporation you can pay yourself a salary,” he says. “That may make it easier for a self-employed individual to qualify for a mortgage.”

Incorporating could also reduce tax rates and allow the business owner to collect a higher salary or dividend payout, Mr. Hull adds.

Globe and Mail finance*

Mortgage in Barrie,  best mortgage rates , mortgage broker  darick.ca  , Dominion Lending Centres Barrie   dbattaglia@dominionlending.ca